INTERSHORES I Licensing and Franchising : Royalty Collection

One of the most common uses of IOFCs (International Offshore Financial Centres) is for the collection of revenue from technology licenses, franchise fees, and royalties on other transfers of intellectual property. These types of payment often result from transfers of intellectual property from more advanced nations to less advanced ones.


Such payments are often subject to withholding taxes in the country from which they originate, and will get taxed, perhaps doubly, on arrival in the country of the licensor. Therefore an IOFC having good double-tax treaties with emerging markets countries, and not levying withholding tax on onward payments, will be a suitable location for an intermediary company. If the offshore collection company can be independent of the originating company (the licensor or franchisor) then so much the better, and the profits from licensing may be available free of tax altogether.


The US and many other countries have legislation designed to ensure that companies do not manage to escape tax due on the sale of intellectual property from offshore jurisdictions. However, this legislation was not designed to cope with digital downloads of intellectual property or property rights from servers in offshore jurisdictions. Many tax-efficient opportunities of this type are arising as the range of digitally downloadable products expands, but great care is necessary in setting up such schemes given the uncertainty of the legal and fiscal environment.


While tax treaties are not absolutely vital to the success of offshore licensing schemes, they are quite important, and the list of jurisdictions below is restricted to those IOFCs having good networks of double-tax treaties.


CyprusGibraltarIrelandLuxembourgMadeiraMaltaMauritius, Panama


Do not hesitate to contact if you want to know more about tax treaties for a specific jurisdiction.


If you want to know more, please do not hesitate to contact us:


Whatsapp : (852) 6499 4686

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Whilst reasonable care has been taken in provision of information above, it does not constitute legal or other professional advice. INTERSHORES does not accept any responsibility, legal or otherwise, for any error omission and accepts no responsibility for any financial or other loss or damage that may result from its use.  In particular, readers are advised to take appropriate professional advice before committing themselves to any involvement in jurisdictions, vehicles or practice.











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